## Does It Make Sense To Sell Your Rental Property?

 

Being a landlord does not always make sense from a financial and quality of life perspective. Whether you stumbled into rental property ownership accidentally, or you have collected a portfolio of rental properties intentionally, there comes a time when every rental property owner asks themselves if the headaches and financial returns are worth it. 

 

If you are having second thoughts about owning your rental property, we want to make sure you know about OfferMarket. 

 

OfferMarket is a rental property investment platform. We and our network of qualified investors would love to provide you with [competitive offers](https://www.offermarket.us/sell) for your unwanted property. Requesting an offer for your rental property is free and comes with no risk and no obligation.

 

## Financial Perspective

 

At the end of the day, owning one or more rental properties is a business. Your rental income is revenue. Your tenants are your customers. Your real property is an asset. Your mortgage and deferred maintenance are liabilities. The best way to judge the performance of your rental property business is to look at two things: 

 

1. the free cash flow that it generates
2. the equity you have in your property

 

## Free Cash Flow

 

Free cash flow is the cash your rental property generates after subtracting your mortgage principal, interest, taxes, insurance ([PITI](https://offermarket.us/real-estate-glossary/piti)), property management, and your reserve for maintenance. If you self-manage the property, we recommend factoring in your time at the same rate that you would otherwise pay to a [property management company](https://rpmexplore.com/). This is typically 5% to 10% of monthly rent and 25% to 50% of first month's rent for new tenant leasing.

 

If your rental property is generating negative free cash flow (i.e. you are losing money on a monthly or annual basis), then the property is likely not worth owning or one or more actions need to be taken to correct the situation. 

 

- Raise rent
- Fill vacancies
- Refinance into a lower rate to reduce your interest payments

 

It is possible neither of the above is feasible. Perhaps the property has major [deferred maintenance](https://offermarket.us/real-estate-glossary/deferred-maintenance) that needs to be addressed in order to fill vacancies or raise rent.

 

When you look at your annual free cash flow plus your equity appreciation divided by your equity in the property, you will get a clear sense of how your investment is performing relative to other investments. Most notably, relative to passive investments that do not take up your time.

 

**For example:** if your property is generating $5,000 per year in free cash flow and your property is worth $5,000 more compared to last year, and you have $100,000 of equity in your property, then your return is 10%. Compare that to the S&P 500's 10 year annualized return of 13.4%. Looking at it this way makes it difficult to justify owning and managing a rental property from a financial perspective.

 

## Quality Of Life Perspective

 

Rental properties are not just financial investments, they are time investments. As we covered above, they are a business and they do not perform well with absentee owners. That's why we recommend factoring in the cost of your time if you self-manage your property. Even if you use a property management company, you're still ultimately responsible for managing your rental property. Finding a great property management company can be easier said than done, and a low percentage of property management companies perform to a satisfactory level.

 

If you're retired and you want something to keep you busy, owning and managing rental properties might fit in great with your lifestyle. If you're retired and you want to travel or reduce stress, owning rental properties might not be an ideal situation.

 

If you own one or more rental properties and you are worried about leaving your loved ones with an unwanted responsibility when you pass on, it might make sense to cash in on your rental investment.

 

## Most common reasons to sell your rental property

 

Drawing on the above concepts and adding one final point to the list, here are the reasons why landlords get tired of owning a rental property:

 

1. Financial returns are inadequate
2. Quality of life is negatively affected
3. Political and economic factors

 

To this final point, we can look to the #rentstrike movement brought on by the major economic shock caused by the COVID-19 pandemic. Landlords, especially "mom and pop landlords" are getting squeezed by a moratorium on evictions, and a growing resentment towards landlords.

 

## Next Step: Get Competitive Offers

 

If you are tired of being a landlord, you are not alone. Either you know for sure you want to sell your rental property or you are still trying to figure it out.

 

Regardless of which camp you are in, you can [request offers](https://offermarket.us/sell) with no obligation. We would love to buy your rental property.

Tired of being a landlord? It has never been easier to sell your rental property for a competitive price. Get risk free offers from OfferMarket.

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Tired of Being a Landlord? Sell Your Rental Property

## Finding motivated sellers is more important than building your buyers list

 

Finding motivated sellers is a fundamental component of real estate wholesaling. If you read our previous article, [How to Build a Buyers List](https://www.offermarket.us/guides/real-estate-wholesaling-how-to-build-a-buyers-list?ref=guide-real-estate-wholesaling-how-to-find-motivated-sellers), you'll recall our opinion that building a buyer's is a distant second place behind putting sellers under contract. If you don't know how to put sellers under contract, you will have a very hard time being a successful real estate wholesaler.

 

The purpose of this article is to teach you how to find motivated sellers. Let's take a step back and look at real estate wholesaling from a different perspective.

 

## Where are the motivated sellers?

 

Motivated sellers are all around you, and it can be overwhelming to stay organized and remember all of the different channels where motivated sellers can be found.

 

Here are some of the most important sources of motivated sellers:

 

- property tax lien lists (public record)
- property tax records showing unpaid, late balances (public record)
- property tax data showing out-of-state owner and ownership change via inheritance (public record)
- properties in your area with maintenance issues and overgrown yards​

 

## How do you get in touch with motivated sellers?

 

It's important to get this part right, because you can spend a lot of time researching only to have a pitch that misses the mark. Don't get shut down by the seller.

 

- Have a reason for getting in touch.
- Make it about the seller and how you can help.
- Be respectful and empathetic.
- Be different, remarkable, memorable.
- Show genuine curiosity and look for the catalyst to a sale.

 

​If your communication channel is a cold call, get your core message delivered up-front in an uninterrupted manner.

 

## Look for the catalyst

 

Catalysts are a motivating factor to sell in the near term. Examples include:
​
 

- Relocating for work and needs to sell quickly in order to buy another home.
- Financial emergency
- Frustrated out-of-state owner dealing with difficult tenants.

 

Whatever the reason my be, find it out. If it's enough of a catalyst, there's a high probability you can create a win-win deal.
Wholesalers post their deals for free on OfferMarket.

 

### Are you a wholesaler? [Wholesalers post their deals for free on OfferMarket.](https://www.offermarket.us/sell?ref=guide-real-estate-wholesaling-how-to-find-motivated-sellers)

Learn how real estate wholesalers find motivated sellers. Where are motivated sellers? How do you engage with motivated sellers?

Wholesaling: How to Find Motivated Sellers - OfferMarket

Real Estate Wholesaling: How To Find Motivated Sellers

## Best practices and considerations for selling a rental property

 

**1.** How much would it sell for as a primary residence vs. turnkey rental? Rental investors are not likely to pay what a primary residence buyer would pay.

 

**2.** Can you sell AS IS and not conduct expensive pre-sale repairs? How might that affect your net proceeds in a sale to either a rental investor or a primary residence buyer?

 

**3.** What are the carrying costs of your vacant property? Would it make more sense to have tenants in place on a month-to-month lease or would this make it too difficult to coordinate showings (especially with COVID related health and safety concerns)?

 

**4.** Do you need to sell now or can you continue to rent (i.e. short term lease) while addressing deferred maintenance?

 

This is a lot of food for thought and everyone has a different situation when selling a rental property. We would be happy to run the numbers for you to help you figure out the best strategy for selling your rental properties.

 

## Sell with OfferMarket

 

The easiest and most cost-effective way to sell your rental property is with OfferMarket. Whether your rental property is vacant or tenant-occupied, we have handled it all and we look forward to facilitating your Here's how it works:

 

**1. Get Offers** 

 

Take 30 seconds to fill out our [Get Offers](https://www.offermarket.us/sell) request. We'll send you our no obligation marketing contract and collect property details.

 

**2. Review Offers** 

 

Compare multiple competitive AS IS, commission-free offers from qualified buyers in our network.

 

**3. Close on your timeline** 

 

Select the best offer that aligns with your timeline. Whether you need to sell in under 30 days or you have time, our rental property sales platform is designed to meet your specific requirements. Let us handle the paperwork, titlework, and coordinate closing.

 

## What our sellers are saying

 

"When I decided to sell my rental properties in Baltimore, as an out-of-state seller, I was looking for something quick and easy but I did not want to have any regrets about selling for too low a price. At first I tried working with an agent on the MLS, that turned out to take forever because we had to wait for lease expiration and multiple FHA loans fell through. Then a friend told me about OfferMarket. I only with I found them sooner! They ran a competitive campaign, brought in a mix of rental property investors and retail homebuyers, and delivered net proceeds beyond my expectations. I avoided over $100,000 in commissions. I never would have thought I'd be able to sell my rental properties so fast, as-is, with so little effort. If you're selling a rental property, use OfferMarket."

 

*Jordan R., FL*

Selling a rental property involves unique challenges. Learn best practices for selling a rental, including managing occupancy and condition.

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Selling A Rental Property - OfferMarket Blog

Selling A Rental Property

Grow your real estate investing business with the most competitive DSCR loan product. OfferMarket provides DSCR rental loans, bridge loans, hard money, fix and flip, slow flip, and ground up construction loans.

Private Lending | OfferMarket

Private Lending

What Is LTV Financing?

Understanding Loan-To-Value Ratio

Types of LTV Financing

Benefits of LTV Financing

Risks and Considerations

Conclusion

Frequently Asked Questions

DSCR Loan Quote

**Last Updated:** February 4, 2025

 

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</iframe>
</div>

 

LTV financing, or loan-to-value financing, plays a crucial role in the world of lending and real estate. It’s a financial metric that helps lenders assess the risk of a loan by comparing the amount borrowed to the appraised value of the property. [Understanding LTV](https://www.offermarket.us/blog/ltv) can empower borrowers to make informed decisions about their financing options and potential investments.

 

In a market where real estate values fluctuate, grasping the concept of LTV financing can be a game-changer. It not only influences loan approval but also affects interest rates and terms. Whether someone is a first-time homebuyer or a seasoned investor, knowing how LTV impacts their financial journey is essential for achieving their goals.

 

## **What Is LTV Financing?**

 

Loan-to-value (LTV) financing is a key concept in the [lending](https://www.offermarket.us/blog/dscr-lending) and real estate sectors. LTV is a ratio used by lenders to assess the risk associated with a loan. It compares the amount borrowed to the appraised value of a property. This metric helps lenders determine how much risk they take, influencing loan approval, interest rates, and terms.

 

For example, if a borrower seeks a loan of $80,000 for a home appraised at $100,000, the LTV ratio is 80%. Low LTV ratios typically indicate less risk, while higher ratios suggest increased risk. Understanding LTV requires attention since it can impact both first-time homebuyers and seasoned investors.

 

[Lenders](https://www.offermarket.us/blog/dscr-lenders) often require a lower LTV for favorable loan conditions. An LTV of 80% or lower might qualify a borrower for better terms. Conversely, an LTV above 80% can lead to higher interest rates or private mortgage insurance (PMI) fees. This makes knowledge of LTV crucial for effective financial decision-making.

 

## **Understanding Loan-To-Value Ratio**

 

Loan-to-value (LTV) ratio plays a crucial role in lending, particularly in real estate. This ratio compares the amount borrowed to the appraised value of the property, helping lenders assess risk associated with the loan.

 

### **Definition and Significance**

 

LTV ratio is defined as the ratio of a loan to the value of the property securing it. For example, if a borrower requests $80,000 for a property valued at $100,000, the LTV ratio stands at 80%. A lower LTV ratio, such as 70% or below, indicates less risk for lenders. High LTV ratios often suggest more risk, affecting loan approval and terms. Understanding LTV is essential for borrowers, as it influences interest rates and can determine if [private mortgage insurance](https://www.offermarket.us/blog/pmi) (PMI) is needed.

 

![DSCR Loan Rate By LTV](https://cms.offermarket.us/uploads/DSCR_Loan_Rate_By_LTV_d85b841e50.png)

 

### **How It Is Calculated**

 

The **LTV ratio** is calculated using the following formula:

**LTV \= (Loan Amount / Property Value) × 100**

This formula expresses the loan amount as a percentage of the total property value.

 

### **Example Calculation**

 

If a borrower takes out a **$180,000 loan** to purchase a property appraised at **$225,000**, the LTV calculation is:

LTV \= (180,000 / 225,000) × 100 \= 80%

An **LTV of 80%** means that the borrower is financing **80% of the property’s value**, while the remaining **20% represents their equity.**

 

### **LTV Calculation Table**

 

<div style="display: grid; grid-template-columns: repeat(1, minmax(0, 1fr)); overflow: auto; white-space: nowrap;">
<table><thead>
 <tr>
 <th>Loan Amount</th>
 <th>Property Value</th>
 <th>LTV Ratio</th>
 </tr></thead>
<tbody>
 <tr>
 <td>$150,000</td>
 <td>$200,000</td>
 <td>75%</td>
 </tr>
 <tr>
 <td>$180,000</td>
 <td>$225,000</td>
 <td>80%</td>
 </tr>
 <tr>
 <td>$200,000</td>
 <td>$250,000</td>
 <td>80%</td>
 </tr>
 <tr>
 <td>$300,000</td>
 <td>$400,000</td>
 <td>75%</td>
 </tr>
 <tr>
 <td>$350,000</td>
 <td>$500,000</td>
 <td>70%</td>
 </tr>
</tbody>
</table>
</div>

 

## **Types of LTV Financing**

 

LTV financing includes several types that borrowers can consider based on their needs and qualifications. Understanding these types helps in making informed financial decisions.

 

### **Conventional Loans**

 

[Conventional loans](https://www.offermarket.us/blog/is-a-dscr-loan-conventional) are not backed by the government. These loans typically come with stricter LTV requirements. Lenders often prefer LTV ratios around 80%. Borrowers with LTVs below this threshold may qualify for better interest rates. For example, a borrower taking a loan of $160,000 on a property worth $200,000 has an LTV of 80%. Higher LTV ratios can lead to additional costs like private mortgage insurance (PMI).

 

### **FHA and VA Loans**

 

[FHA loans](https://www.offermarket.us/blog/fha-203k-loan) are backed by the Federal Housing Administration. These loans allow higher LTV ratios, often up to 96.5%. A borrower can receive a loan for $196,000 on a home worth $200,000 with an LTV of 98.5%. In contrast, VA loans, offered to veterans, also allow high LTV ratios. They may permit borrowers to finance up to 100% of the home's value without PMI. Both loan types offer unique benefits depending on the borrower’s situation.

 

## **Benefits of LTV Financing**

 

LTV financing provides several [advantages for borrowers](https://www.offermarket.us/blog/borrower-benefits-dscr), making it a popular choice in lending. Understanding these benefits helps borrowers make informed decisions about their financing options.

 

### **Lower Interest Rates**

 

LTV financing typically offers lower [interest rates](https://www.offermarket.us/blog/dscr-interest-rates) for borrowers with a lower LTV ratio. Lenders view lower LTVs as less risky since the equity in the property is higher. For instance, an LTV of 75% might qualify a borrower for a more favorable rate compared to a higher LTV, such as 90%. This reduction in interest costs can lead to significant savings over the life of the loan.

 

### **Increased Borrowing Power**

 

LTV financing can increase borrowing power, allowing borrowers to access larger loan amounts. A higher property value relative to the loan means borrowers can secure funding without needing substantial cash upfront. For example, a property appraised at $200,000 could allow a borrower to finance $160,000 with a 80% LTV. This increase in potential funds can be essential for buyers looking to make a competitive offer or fund their investment projects.

 

## **Risks and Considerations**

 

LTV financing comes with several risks and important factors to keep in mind. Borrowers must understand these aspects to make well-informed decisions.

 

### **Default Risk**

 

Default risk increases with higher LTV ratios. When borrowers take on loans with a high LTV, they face greater chances of not meeting the [repayment terms](https://www.offermarket.us/blog/dscr-loan-terms#:~:text=What%20are%20typical%20DSCR%20loan%20repayment%20terms%3F) if they encounter financial difficulties. Lenders view high LTV ratios as risky, which may lead to stricter loan conditions or higher interest rates. For example, a borrower with a 90% LTV may default more likely than one with a 70% LTV, resulting in higher expenses over the loan's lifespan.

 

### **Market Volatility**

 

Market volatility can significantly impact LTV ratios. If property values decline, an existing high LTV can worsen, making refinancing challenging and increasing the risk of owing more than the property is worth. With a decreasing property value, investors or [homeowners](https://www.offermarket.us/blog/hoa-meaning) may find it difficult to sell without incurring losses. For instance, if a home valued at $200,000 drops to $160,000, a borrower with a high LTV faces a tougher financial situation. Awareness of market trends and conditions helps borrowers manage risks effectively.

 

[![Need a DSCR loan, instant quote, takes 1 minute, no credit pull, no obligation](https://cms.offermarket.us/uploads/Need_a_DSCR_loan_2fb5e4b056.jpg)](https://www.offermarket.us/dscr-loan?ref=content-can-a-tenant-run-a-business-from-a-rental-property)

 

## **Conclusion**

 

Understanding LTV financing is crucial for anyone navigating the lending landscape. It directly influences loan approval and terms which can significantly impact overall financial health. By grasping how LTV ratios work and their implications, borrowers can make more informed decisions that align with their financial goals.

 

Whether considering conventional loans or exploring options like FHA and VA loans, being aware of the benefits and risks associated with different LTV ratios is essential. This knowledge empowers borrowers to secure favorable financing conditions while managing potential risks effectively. Staying informed about LTV financing will ultimately lead to smarter investment strategies and better financial outcomes.

 

## **Frequently Asked Questions**

 

### **What is the loan-to-value (LTV) ratio?**

The loan-to-value (LTV) ratio is a financial metric that compares the loan amount to the appraised value of the property. It is calculated using the formula: LTV \= (Loan Amount / Property Value) × 100\. A lower LTV indicates less risk for lenders, while a higher LTV may suggest more risk.

 

### **Why is LTV important for borrowers?**

LTV is crucial because it impacts loan approval, interest rates, and terms. A lower LTV can qualify borrowers for better rates and conditions, while a higher LTV may lead to higher rates and potential private mortgage insurance (PMI) fees, which can add to overall costs.

 

### **How do conventional and FHA loans differ in terms of LTV?**

Conventional loans generally prefer an LTV of 80% or lower for favorable terms. Conversely, FHA loans can go up to 96.5% LTV, offering more flexibility to borrowers. Choosing the right type of loan depends on individual financial situations and needs.

 

### **What benefits do lower LTV ratios provide?**

Lower LTV ratios generally lead to lower interest rates, making loans less expensive over time. They also enhance borrowing power, allowing access to larger loan amounts which helps borrowers make competitive offers or fund investments more effectively.

 

### **What risks are associated with high LTV ratios?**

High LTV ratios come with increased default risk, as borrowers with high LTVs may struggle to meet payments in financial hardship. Additionally, if property values decline, high LTVs can put borrowers in a situation where they owe more than the property is worth, complicating refinancing options.

 

## **DSCR Loan Quote**

 

![DSCR loan quote](https://cms.offermarket.us/uploads/DSCR_loan_quote_c3ae268aed.jpg)

 

Our mission is to help you build wealth through real estate. Let's grow and optimize your rental property portfolio!

 

- Get your instant [DSCR loan quote](https://www.offermarket.us/loans?ref=content-what-is-ltv-financing) today!
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Learn what LTV financing is, how it impacts loan approvals, interest rates, and borrowing power. Understand risks and benefits of LTV ratios.

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What is LTV Financing? A Simple Guide for Borrowers and Investors

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